Three weeks ago, on the eve of his Senate confirmation hearings and his would-be boss’ inauguration, word broke that Tim Geithner, Barack Obama’s pick for Treasury secretary, had failed to pay $34,000 in Social Security and Medicare taxes between 2001 and 2004.
The error had actually been turned up a month earlier by the Senate Finance Committee, at which point Geithner quietly paid his tax bill, but when it became public knowledge, the fate of Geithner’s nomination was called into question. But only briefly.
He apologized profusely and characterized his incomplete payments as an innocent mistake, and immediately won cover from several key Senate Republicans, including Utah’s Orrin Hatch. At the same time, Obama himself stuck his neck out for his nominee, declaring: "It is an innocent mistake. It is a mistake that’s commonly made for people who are working internationally or for international institutions. It has been corrected. He’s paid the penalties."
Some Republicans decided to make a show of their opposition to Geithner, but a week after the revelation, his nomination cleared the Finance Committee on an 18-5 vote, and a few days after that he won approval in the full Senate, 60-34.
Then there’s Tom Daschle, one of the first cabinet choices announced by Obama back in December. An early and pivotal supporter of Obama’s campaign, the onetime Senate majority leader was tapped by the president-elect to lead the massive Department of Health and Human Services and to serve as the administration’s point man on health care policy.
Daschle spent December hosting a series of town hall meetings on health care policy and when the Senate Health, Education, Labor and Pensions Committee took up his nomination in early January, a speedy and unanimous confirmation seemed to be in the offing. Then, for some unknown reason, the process stalled. The Geithner circus came and went but Daschle’s nomination was just sitting there, waiting for action.
On Sunday, we found out why: Between 2005 and 2007, Daschle had underreported income from consulting fees and the use of a car service and overstated his charitable deductions, something he only became aware of while preparing for his confirmation hearings. He filed an amended tax return, cut a check for nearly $140,000 to the I.R.S., and alerted the Senate committee.
Initially, it looked like we would simply witness a repeat of the Geithner saga. On Monday, Daschle apologized, Obama publicly stuck up for him, White House aides lobbied on his behalf, and some key senators—most notably from Finance Committee Chairman Max Baucus, whose panel would also have voted on Daschle’s nomination—reaffirmed their support.
And then on Tuesday morning, Daschle pulled the plug, withdrawing his name from consideration on the grounds that he risked becoming a distraction for the new administration. The White House emphasized that Daschle wasn’t pressured to quit, but it’s also clear that no one—including Obama—tried to talk him out of it.
In Geithner and Daschle, then, we have two high-profile nominees who both committed—years ago—the same basic tax-related sin. But only Daschle paid with his job. In explaining Daschle’s withdrawal, White House Press Secretary Robert Gibbs rather curiously said that Daschle had recognized that "that you can’t set an example of responsibility but accept a different standard of who serves."
But if that’s the case, Gibbs was then asked, why is Geithner on the job? He didn’t pay his taxes and now he’s running the department charged with collecting them.
Gibbs seemed to realize the corner he’d backed himself into and responded in classic press-secretary style: with a statement of fact that has nothing to do with the question asked: "The process has guided Mr. Geithner to being the secretary of Treasury of the United States of America, a position he was approved for by the Senate with bipartisan support and serves in today." Thanks for clearing that up.
The difference between the two, of course, is pretty simple: Geithner got caught first, meaning that he got to play the I-swear-I-didn’t-mean-to-do-any-of-this-and-it’ll-never-happen-again-and-my-nomination-is-really-important-because-of-the-Economic-Crisis card first. If Daschle’s woes had come to light first, he’d have received the slap on the wrist—a couple of days of bad press and a few dozen Republican no votes—that Geithner got.
Making matters worse, Daschle’s self-preservation push coincided with a third tax controversy, this one far more minor, involving Nancy Killefer, Obama’s chief performance officer choice, and her $298 (plus about $650 in penalties and interest) in unpaid D.C. unemployment taxes for her household help. In other circumstances, Killefer’s issue would barely have made news. But now it fit perfectly with the Daschle controversy: If she was quitting over a few hundred bucks in unpaid taxes, why would the White House stick with Daschle and his $140,000 debt?
Daschle still probably could have survived. With 58 (maybe soon 59) votes in the Senate, Democrats—especially given Daschle’s status as their leader for a decade—probably would have put him over the top.
But with Geithner having exhausted the G.O.P.’s and the media’s patience for tax flare-ups, it would have been a rougher process: tougher attacks, more media coverage, longer deliberations. Plus, the G.O.P. would have had more ammunition to drum up public outrage: Daschle’s financial disclosure painted a picture of the consummate Washington insider—cozy relationships with major industries, obscene speaking fees (often to special interest groups) and the use of a car service courtesy of a telecommunications mogul.
Daschle would have prevailed, but would he have had any clout to pursue Congressional cooperation, particularly from Republicans, on health care reform—his whole reason for taking the job in the first place?
If Tim Geithner had just paid all of his Social Security and Medicare taxes a few years ago, Tom Daschle would now be the secretary of Health and Human Services. But Geithner didn’t, so now President Obama is scrambling to find a new point man on health care.